RBI Reiterates Ban on Cash Issuance of Demand Drafts of Rs 50,000 and Above
No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2011-12/135 · issued 01 Aug 2011 · ~2 min read
Quick answerRBI has warned banks against issuing demand drafts of Rs 50,000 and above against cash. Such drafts must only be issued by debiting the customer's account or against a cheque/instrument. Violations will be viewed seriously.
What changed
RBI observed that some banks have recently issued demand drafts of Rs 50,000 and above against cash deposits, violating long-standing instructions from April 1991. The central bank has now reiterated that these instructions must be strictly complied with, warning that any breach will be treated as a serious regulatory concern.
What it means for you
Banks must immediately stop any practice of issuing high-value demand drafts against cash. This reinforces anti-money laundering and financial integrity measures. Non-compliance could invite regulatory action, including penalties. Lenders need to tighten internal controls and staff training to ensure adherence.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Review and reinforce internal processes to ensure no demand draft of Rs 50,000 or above is issued against cash.
Train all branch staff and cash management teams on the mandatory requirement to debit customer account or accept a cheque/instrument for such drafts.
Conduct an internal audit to identify any past violations and take corrective action immediately.
Report any observed non-compliance to the compliance head and ensure escalation to RBI if required.
Who it affects
All scheduled commercial banks (excluding RRBs), Branch operations teams handling demand drafts, Compliance and audit departments, Retail and corporate banking customers purchasing high-value drafts
❓ Common questions
Regulatory timeline
Decoded by BankPulse2026-06-18 23:54 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn03 Aug 2026, 04:00 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
Can a customer still get a demand draft of Rs 50,000 or more by paying cash?
No. RBI has reiterated that such drafts must only be issued by debiting the customer's account or against a cheque or other instrument. Cash payment is not allowed.
What are the consequences if a bank violates this rule?
RBI has stated that any violation will be viewed seriously and may lead to regulatory action, including penalties.
Does this rule apply to all types of banks?
Yes, it applies to all scheduled commercial banks, excluding Regional Rural Banks (RRBs).
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed byRBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #1441: DBOD.BP.BC.No.26/21.01.001/2011-12 — "Misuse of Banking Channels - Issue and Payment of Demand Drafts for Rs. 50,000/- and above" dated August 1, 2011”
📜 Read the original circular — full text as issued by RBI
RBI/2011-12/135
DBOD.BP.BC. No. 26 / 21.01.001/2011-12
August 1, 2011
To,
The Chairmen / Chief Executives of
All Scheduled Commercial Banks
(excluding RRBs)
Dear Sir,
Misuse of Banking Channels - Issue and Payment of Demand Drafts for Rs. 50,000/- and above
Please refer to our circular DBOD.BP.BC.No.114/C.469(81) - 91 dated April 19, 1991 in terms of which demand drafts, mail transfers, telegraphic transfers and travellers cheques for Rs.50,000 and above should be issued by banks only by debit to the customer's account or against cheques or other instruments tendered by the purchaser and not against cash payment. These instructions were extended to retail sale of gold/silver/platinum vide our circular DBOD.No.IBS.1816/ 23.67.001/98-99 dated February 4, 1999.
2. It has been brought to our notice that some banks have recently issued demand drafts of Rs. 50,000 and above on deposit of cash and not against debit to the customer’s account or against cheques or other instruments tendered by the customer.
3. In the current scenario where the integrity of the financial system in general and the banking channels in particular is of paramount importance, breach of these guidelines is a matter of serious regulatory concern in view of the wide ranging ramifications.
4. In the above context, we reiterate that the instructions conveyed vide our circular dated April 19, 1991 referred to above may be strictly complied with by banks. Any violation of these instructions will be viewed seriously.
Yours faithfully,
(P. R. Ravi Mohan)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2011-12/135 · issued 01 Aug 2011. The plain-English explanation above is BankPulse’s own independent summary.
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=6647&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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